General Electric Company (NYSE:GE) power division has signed a multiyear service agreement (MYA) with Centrais Elétricas de Sergipe S.A. (CELSE) for a new combined-cycle power plant in northeastern Brazil. The agreement includes operations, maintenance, repairs and digital solutions as well as GE’s first order in Latin America for its OpShield cybersecurity solution. The solutions in the agreement will help improve the plant’s performance and availability and enable safe operational technology connectivity. The 1,516-megawatt (MW) Porto de Sergipe plant is expected to meet an estimated 15 percent of the energy needs of northeastern Brazil. It will be Latin America’s largest gas power plant when it begins operating in January 2020.
“GE has the power generation services and digital expertise we need to reliably and securely operate the Porto de Sergipe plant for years to come,” said Eduardo Maranhão, CEO of CELSE, a new independent power producer in Brazil. “We are pleased this project incorporates the latest digital technology and security solution into our multiyear agreement with GE to help us ensure that our Porto de Sergipe plant operates at the highest levels of reliability and availability to support our power purchase agreements.”
The agreement will cover:
- Long-term plant maintenance including scheduled maintenance on the gas and steam turbines, auxiliary components, generators and control systems.
- Plant operation and maintenance (O&M) services.
- Digital solutions including Asset Performance Management and Operations Optimization, which run on GE’s Predix* platform—the operating system for the Industrial Internet.
- OpShield cybersecurity solution, a specialized internet-connected sharing firewall that helps protect critical infrastructure by monitoring and blocking malicious activity directed at plant assets.
GE’s solutions are expected to help the plant achieve better reliability and performance. The cybersecurity solution, with the ability to demonstrate security actions and activities, will help improve operational reliability, reduce risk in business continuity and meet regulatory compliance for NERC CIP.
“Our Fleet360* platform of total plant solutions will help CELSE get the most value out of its investment in building the Porto de Sergipe plant,” said Ramon Paramio, region general manager of GE’s Power Services in Latin America. “The project is particularly noteworthy because it includes end-to-end services tailored to help meet CELSE plant’s availability, heat rate and output targets.”
This agreement follows an announcement GE and CELSE made in October 2016 for the original equipment order, valued at more than $900 million, for the turnkey combined-cycle plant project. The plant, which is being built in Barra dos Coqueiros in the state of Sergipe, will include three of GE’s 7HA gas turbines as well as a steam turbine, heat recovery steam generator and transmission technology. GE also is supplying the entire power island engineered package and remaining balance of plant such as cooling towers, foundations, roads and buildings.
GE employs more than 13,000 people in Brazil, where the company has been present for 96 years. Its equipment already is responsible for supplying more than 33 percent of all energy produced in the country, exceeding 47 gigawatts.
Shares of General Electric closed last Friday at $30.28, up $0.62 or 2.09%. GE has a 1-year high of $33 and a 1-year low of $28.19. The stock’s 50-day moving average is $29.99 and its 200-day moving average is $30.34.
On the ratings front, GE has been the subject of a number of recent research reports. In a report issued on March 9, Cowen analyst Gautam Khanna reiterated a Hold rating on GE, with a price target of $30, which represents a slight downside potential from current levels. Separately, on March 8, RBC’s Deane Dray reiterated a Buy rating on the stock and has a price target of $36.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Gautam Khanna and Deane Dray have a yearly average return of 11.3% and 3.2% respectively. Khanna has a success rate of 68% and is ranked #709 out of 4517 analysts, while Dray has a success rate of 61% and is ranked #1168.
Overall, one research analyst has rated the stock with a Sell rating, 2 research analysts have assigned a Hold rating and 6 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $34.50 which is 13.9% above where the stock closed last Friday.